Financial Update: April 2015
Helen Bowman, Drexel's executive vice president, treasurer, and chief financial officer, sent out a message to Drexel employees Tuesday, April 28, outlining the University's financial picture for Fiscal Year 2015, as well as changes in the performance review process.
Her message is as follows:
Thank you for your ongoing focus on fiscal decisions that advance Drexel’s mission and keep the University’s financial position solid, particularly as we focus on implementing a student lifecycle management (SLM) approach to recruiting and retention. I want to update you on the specifics of our finances and also discuss the priorities that inform our budget.
The combined Drexel and Academy of Natural Sciences endowments totaled $683.2 million at the end of March. Thomas R. Kline’s landmark gift to the law school and several major gifts to the Academy of Natural Sciences are the primary reasons why fiscal year revenues through March are up $57.9 million over last year and net assets increased by $58.1 million, $35.3 million ahead of what we budgeted. That said, I know every unit has felt the impact of challenging cost-containment goals, but your efforts to date have resulted in costs that are less than the year-to-date budget. Our continued attention to SLM and controlling expenses will be a key factor in the future success of Drexel’s academic enterprise. On April 24, Standard & Poor’s affirmed our “A” long-term bond rating with a stable outlook, recognizing our consistently strong operating performance. They also recognized our improved financial management, enrollment efforts and fundraising results.
We are fortunate to have an outstanding philanthropic culture around Drexel that contributes critical resources to the University. Drexel has already raised more than $100 million in new gifts and pledges this fiscal year, the first time in history we have achieved this milestone. Institutional Advancement is also implementing strategies to increase the number of alumni who give back to Drexel, so that we can sustain our fundraising success over the long term.
The goals outlined in our strategic plan are essential to maintaining Drexel’s position as a national leader and a Philadelphia anchor institution, and they are supported by our annual budget. One of our priorities is to continue to focus on the accessibility and affordability of a Drexel education. For the second straight year, the Board of Trustees has approved an overall rise in tuition and fees well below historical levels, and significantly less than many of our competitors. This year’s overall increase will be 2.84 percent — tuition will go up by 3.9 percent, but room, board and fees will remain at their current levels.
The target enrollment for our incoming freshman class is once again 2,900, and we continue to strive to recruit academically talented, right-fit students who will graduate from Drexel and go on to fulfilling careers and future studies. At the same time, we plan to increase the University’s investment in financial aid significantly more than the normal increase that results from increases in tuition and fees. Meeting student need is vital to our long-term goals of 90 percent-plus freshman retention rates and 80 percent-plus six-year graduation rates.
Through much conversation and collaboration with various constituencies, we also made a decision aimed at improving Drexel’s ability to reward and retain its outstanding faculty and professional staff. Beginning immediately, the performance review and merit increase process will move to a calendar year basis rather than fiscal year. The recent survey assessing Human Resources’ service to the Drexel community identified the need for a more robust merit pool. In order to achieve this moving forward, the University needs a full understanding of its total enrollment, which for Drexel happens late in the calendar year. Drexel is a tuition-dependent institution, and it makes more sense to base the merit increase pool on actual fall enrollment rather than early projections made in the spring. For this year we project that the merit pool will be 2 percent, awarded in January 2016, with performance reviews taking place in the fall rather than this spring. Provided we meet enrollment and budget targets going forward, we will aim to set future merit increases at higher levels to appropriately recognize the commitment and expertise of Drexel’s employees, as well as create an equity and compression pool to remain at competitive levels for our faculty and professional staff. The Faculty Senate discussed and supported the change in its meeting on April 7.
I am proud that we have positioned the University to fulfill its mission in the changing landscape of higher education, and especially that we have done it collaboratively. Thank you for your efforts.
Helen Y. Bowman
Executive Vice President, Treasurer, and Chief Financial Officer